In this article, we will review COBRA and how to get COBRA insurance if you qualify.
If you’ve lost your job recently, you may be worried about what you will do for health insurance. With the recent string of layoffs and downsizing due to COVID-19, many Americans have found themselves in this situation. Fortunately, you may be eligible to keep your employer-based healthcare for a period of time through COBRA. Here is how to get COBRA insurance.
What is COBRA?
COBRA stands for Consolidated Omnibus Budget Reconciliation Act. It is an act that allows you to continue using your employer-provided health insurance for up to 18 months after you’ve left your job, if you qualify.
Unfortunately, with COBRA, you must pay the full health insurance premium out-of-pocket, as it is no longer coming out of your paycheck or being subsidized by your employer. This means you will end up paying more than the amount you used to see coming out of your paycheck.
If you have enough savings to continue paying for the health insurance premium that used to come out of your paycheck, COBRA can be an excellent option for getting the coverage you need. If not, a better option may be to enter the health insurance marketplace, as losing your job qualifies you for a “Special Enrollment Period” in the health insurance marketplace for 60 days. But you should confirm with your employer the amount you will be expected to pay monthly through COBRA before making a decision on whether to use COBRA or the marketplace.
Who is Eligible For COBRA?
Your COBRA eligibility is dependent on whether or not your health care plan is subject to the ERISA (Employee Retirement Income Security Act of 1974). If you worked for a company in the private sector with 20 or more employees, your company is most likely subject to ERISA, and thus, you are eligible for COBRA.
If you have been laid off, had your hours reduced, or were fired for anything other than “gross misconduct,” you are most likely eligible. If you have any questions about your eligibility, it is best to contact your former employer.
How to Get COBRA Insurance
If you are eligible for COBRA, the signup process is fairly simple. Your employer is required to send you a COBRA signup forms within 45 days of your layoff. If you do not receive the forms, you should reach out to your employer and request them.
You have a 60-day period to review the forms and complete you signup. The forms will have details of the benefits you are entitled to, the payment that will be expected, and other important information. Be sure to read this information carefully and make a decision for yourself on whether or not you would like to signup. Once you have decided, you must fill out the forms are return them via mail within the 60-day period.
Should You Use COBRA?
One thing that is important to keep in mind when trying to decide whether or not you should signup for COBRA, is that it is only a temporary solution, and it can be expensive. Although you can keep your insurance for up to 18 months through COBRA, that time period can go by quickly. If you anticipate being unemployed for longer than 18 months, it may be better to find an alternate solution, like the health insurance marketplace.
Something else you should weigh before making a decision is the cost. The cost of COBRA is often higher than your insurance cost would be through the marketplace. You can end up paying 102% of the total premium through COBRA, due to a 2% administrative fee. Although you may be able to pay that premium now, you should think long-term about whether or not you will be able to continue paying it.
If down the line, you decide that you COBRA insurance is too expensive, and you would rather find a different insurance plan, you can elect to drop COBRA and find a plan on the marketplace, however, you may not qualify for a special enrollment period in that case, and could end up having to wait until open enrollment period, from November to December to enroll in a new healthcare plan.
COBRA can be an excellent option if you have lost your job recently and find yourself worrying about where you will get health insurance. However, there are other options, and you should weigh the pros and cons of signing up for COBRA and make a decision for yourself.